Business Acquisitions, Investments and Restructuring Charges

6 Months Ended

Jun. 30, 2022

Business Combination and Asset Acquisition [Abstract]

BUSINESS ACQUISITIONS, INVESTMENTS AND RESTRUCTURING CHARGES

Acquisitions

We acquired various environmental services, waste, and recycling businesses during the six months ended June 30, 2022 and 2021. The aggregate purchase price paid for these business acquisitions and the allocations of the aggregate purchase price follows:



	2022		2021
Purchase price:
Cash used in acquisitions, net of cash acquired of $64.6 and $3.0, respectively	$	2,516.6	$	561.7

Holdbacks	10.1		5.5
Fair value, future minimum finance lease payments	15.6		40.2

Total	$	2,542.3	$	607.4
Allocated as follows:
Restricted cash	$	—	$	7.2
Accounts receivable	250.5		16.7
Prepaid expenses	15.5		—
Landfill development costs	495.7		65.9
Property and equipment	688.0		67.1
Operating right-of-use lease assets	55.4		0.4
Interest rate swap	29.1		—
Assets held for sale	—		43.1
Other assets	38.0		2.1
Inventory	11.2		0.3
Accounts payable	(109.2)		(10.6)
Deferred revenue	(25.6)		(3.0)
Environmental remediation liabilities	(92.4)		(14.4)
Closure and post-closure liabilities	(88.9)		(32.2)
Operating right-of-use lease liabilities	(55.8)		(0.4)
Deferred income tax liabilities	(151.0)		—
Other liabilities	(49.5)		(11.3)
Fair value of tangible assets acquired and liabilities assumed	1,011.0		130.9
Excess purchase price to be allocated	$	1,531.3	$	476.5
Excess purchase price allocated as follows:
Other intangible assets	$	162.9	$	37.8
Goodwill	1,368.4		438.7
Total allocated	$	1,531.3	$	476.5

The purchase price allocations are preliminary and based on information existing at the acquisition dates. Accordingly, the purchase price allocations are subject to change. Excluding the US Ecology acquisition discussed below, substantially all of the goodwill and intangible assets recorded for these acquisitions are deductible for tax purposes.

These acquisitions are not material to the Company's results of operations, individually or in the aggregate. As a result, no pro forma financial information is provided.

On May 2, 2022, we acquired all outstanding equity of US Ecology, Inc. (US Ecology) in a transaction valued at $2.2 billion. US Ecology is a leading provider of environmental solutions offering treatment, recycling and disposal of hazardous, non-hazardous and specialty waste. We financed the transaction using the proceeds of a new $1.0 billion unsecured Term Loan Credit Agreement (Term Loan Facility) and borrowings under our existing $3.0 billion unsecured revolving credit facility. For further discussion of the borrowings used to fund the US Ecology acquisition, refer to Note 7, Debt, in Part I, Item 1 of this Quarterly Report on Form 10-Q. The preliminary purchase price allocation for the US Ecology acquisition is reflected in the table above and remains subject to revisions as additional information is obtained about the facts and circumstances that existed at the valuation date. The preliminary allocation of purchase price, including the value of certain tangible and intangible assets acquired as well as certain leases and environmental liabilities assumed, is based on the best estimates of management and is subject to revision based on the final valuations. We do not expect a step-up in the tax basis of the assets recognized in connection with the US Ecology acquisition, and do not expect the goodwill and intangible assets will be deductible for tax purposes.

During the three and six months ended June 30, 2022, we incurred $51.9 million and $56.6 million, respectively, of acquisition integration and deal costs in connection with the acquisition of US Ecology, which included certain costs to close the acquisition and integrate the business, including stock compensation expense for unvested equity awards at closing as well as severance and change-in-control payments.

Investments

In July 2022, we made an investment of approximately $90 million in a joint venture with a landfill gas to energy developer to construct 39 renewable natural gas projects across the United States. The agreement provides for additional contributions as certain project milestones are achieved over the next four to five years.

In 2022 and 2021, we acquired non-controlling equity interests in certain limited liability companies that qualified for investment tax credits under Section 48 of the Internal Revenue Code. In exchange for our non-controlling interests, we made capital contributions of $121.0 million and $22.7 million, which were recorded to other assets in our June 30, 2022 and 2021 consolidated balance sheets, respectively. During the three and six months ended June 30, 2022, we reduced the carrying value of these investments by $11.9 million and $12.2 million, respectively, and during the three and six months ended June 30, 2021, we reduced the carrying value of these investments by $12.0 million and $25.7 million, respectively, as a result of cash distributions and our share of income and loss pursuant to the terms of the limited liability company agreements. Additionally, our tax provisions reflect a benefits of approximately $24 million and $25 million for the three and six months ended June 30, 2022, respectively, due to the tax credits related to these investments. Our tax provisions reflect a similar benefit of approximately $20 million for both the three and six months ended June 30, 2021. For further discussion of the income tax benefits, refer to Note 11, Income Taxes, in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2021.

Restructuring Charges

During the three and six months ended June 30, 2022, we incurred restructuring charges of $5.9 million and $11.9 million, respectively, and during the three and six months ended June 30, 2021, we incurred restructuring charges of $3.8 million and $6.6 million, respectively, related to the redesign of certain back-office software systems. During the six months ended June 30, 2022 and 2021, we paid $8.3 million and $8.6 million, respectively, related to these restructuring efforts.